Thu. Feb 22nd, 2024

China’s largest oil supplier in 2023 was Russia

By marianna Feb 19, 2024

Hong Kong

Russia surpassed Saudi Arabia to become China’s largest oil supplier in 2023, according to the latest Chinese customs data.

The world’s largest crude buyer imported a record amount of bargain-priced Russian oil last year, taking advantage of Moscow’s desperate search for new buyers amid Western sanctions following the Kremlin’s 2022 invasion of Ukraine.

The volume of Russian crude shipped to China jumped 24% in 2023 to 107.02 million metric tons, compared to 2022, according to data released by China’s General Administration of Customs on Saturday.

That helped Russia overtake Saudi Arabia as China’s largest crude oil supplier for the year. The Middle East country shipped 85.96 million metric tons of crude oil to China in 2023, down 2% from 2022.

Russia now accounts for 19% of China’s oil imports, while Saudi Arabia makes up 15%.

Russia became China’s largest oil supplier eight years ago, but it fell behind Saudi Arabia between 2019 and 2021, when the Gulf nation boosted its energy trade with Beijing.

However, since 2022, China has amplified its purchase of cheaper Russian oil after the West hit Moscow with unprecedented sanctions. China’s imports of Russian crude increased 8% in 2022 to 86.24 million metric tons, compared to 2021. Its neighbor India also ramped up its purchases sharply.

“China would necessarily maximise intake of discounted crude,” said Vandana Hari, founder of Vanda Insights based in Singapore. “Russian barrels were way cheaper than comparable grades through 2023, being limited to the Chinese and Indian markets, more or less.”

China’s total spending on Russian crude reached $60.64 billion last year. That translates to an average import price of $566.64 per metric ton, according to CNN’s calculation. This was about 10% cheaper than the average price it paid for Saudi crude, which was $626.86 per metric ton.

Russia’s oil discounts have helped China reduce its energy bills. Despite an 11% increase in its overall volume of crude imports, including from Saudi Arabia and Iraq, its total spending on oil purchases actually dropped 7.7% in 2023 to $337.5 billion compared to 2022, customs data showed.

According to Hari, Saudi’s production cut also helped Russia to leapfrog. The Gulf nation implemented an additional voluntary output cut of 1 million barrel per day from July through December last year. Though Russia also volunteered additional output and export cuts, they were about half of the Saudi reduction, she added.

Despite the war, Beijing and Moscow have developed closer ties in areas other than energy over the last two years.

Overall trade between China and Russia hit a fresh record high of $240 billion in 2023, up 26% from the previous year. That means the two countries have achieved a goal set in 2019 about a year ahead of schedule.

In the two years since the invasion, hundreds of global brands have fled Russia. That’s forced Russians to find alternatives for everything from smartphones to cars, with Chinese firms often benefiting.

Last month, Chinese leader Xi Jinping hailed Beijing’s partnership with Moscow in a meeting with Russian Prime Minister Mikhail Mishustin.

The trade figures showed a “strong resilience and broad prospects,” Xi said during the meeting in Beijing, according to Chinese state news agency Xinhua.

The two sides should “give full play to the advantages of political mutual trust,” and “deepen cooperation on economy, trade, energy and connectivity,” Xi added.

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